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Connected homes

Can technology and connected devices turn your house into a smart home?

What is a connected home?

Could you imagine running your home from your phone? How we go about our day-to-day activities at home is on the cusp of change, thanks to smart technology and home automation.

From smart meters that monitor your energy usage, to door sensors that let you know via an app the comings and goings at your property, smart technology is here and it’s seeping into our homes. This smart and extensive technology makes up a ‘connected home’.

Technology has advanced to the point where many of our standard electrical devices are emerging as ‘smart devices’, such as smart televisions or smart appliances. These devices can all be connected with each other, and are usually controlled by your phone.

Added security and comfort are two of the major selling points of kitting out a home with smart devices and automated technology. The extent of a connected home can vary, however it’s safe to say smart technology is becoming a lot more accessible in recent years with off-the-shelf purchases such as the Ring doorbell, which provides round the clock video surveillance from your front door.

We have the Internet of Things (IoT) to thank for this, connecting the latest technology with each other through the power of a wireless network.

Within our report we’re looking to explore the capabilities of smart devices and connected homes, the impact this technology could have on home and contents insurance, and most excitingly, what the future holds for this expanding digital space.

Video doorbell

This nifty gadget lets you monitor your home from your phone or tablet, sending you alerts when you have a visitor. Through an app, you can see who’s lurking on your doorstep, and even communicate with them from the comfort of your sofa, your office, or even abroad. Meaning no more missed deliveries!

Smart thermostat

No one likes returning home to a cold house – and now you don’t have to. Smart thermostats such as Hive or Nest, are controlled through an app on your phone, where you can change your heating settings with a simple tap. A revolutionary way of monitoring the temperature of your home, they’re a great way of cutting those energy bills.

Smart meters

Currently being installed across Britain, this is the next generation of a gas and electricity meter. Providing a clear and concise way of seeing just how much energy you’re using on the home display screen, so you can receive accurate bills. If you have a pre-pay meter, you can view your credit status, debt balance, and when you need to top-up.

Leak detection devices

What starts as a small leak can turn into a disaster zone for your home. These nifty devices can detect leakage from a burst pipe or a washing machine. Once a leak is detected, these devices send a notification to your phone, so you can nip it in the bud.

Smart cameras

Security cameras for the home have readily been around for years, but the latest development of smart cameras are more accessible and simple to use for majority of households. Both Nest and Ring offer outdoor smart cameras with a digital twist. Equipped with motion sensors, live streaming, and ability to speak to anyone on your property.

Voice recognition devices

So you’ve got your home kitted out with all these smart devices – now you need a smart way to control it. Enter Alexa. More than just a speaker, Alexa can control your devices via voice commands, and is compatible with majority of big-name smart devices. ‘Alexa, turn down the heating’.

Hive smart sensors

Smart sensors can be fitted to your windows or doors, to give you the peace of mind everything at home is fine. Should movement be detected, you’ll be alerted via the app on your phone.

Smart lighting

Not only is lighting becoming more energy efficient, but you can now control it from your smart devices, too. Different suppliers offer different kits – some require replacing your light switches, whereas some just require a change to Wi-Fi light bulbs (that’s right, Wi-Fi bulbs!), alternatively some come with a plug which connects the lighting to your router.

Smart smoke alarms

Companies such as Nest, and its ‘Nest Protect’ device, have transformed the age old smoke alarm to make it a truly connected device for your home. Push notifications can be sent to your phone if smoke, carbon monoxide, fire or gas is detected. You can even receive updates on the battery life of your alarm – avoiding those annoying low battery chirps early in the morning.

Smart Wi-Fi batteries, from telematics providers such as Roost, can also be retrofitted to existing smoke alarms, bringing old and new together.

Smart homes and home insurance

The cost of protecting your home

From the heyday of cumbersome CCTV units to discreet and modern home security monitors, the speed of smart device development has meant that consumers now have more choice when it comes to protecting their home at an affordable price – but what effect does this have on the cost of home insurance?

Many traditional home insurers have struggled to keep up with the fast pace of technology change within the industry, often referred to as ‘Insuretech’, and have yet to link smart device ownership with home insurance underwriting.

A study by InsuranceNexus of 300 home insurance professionals found that almost 60% of insurers agreed that the adoption of IoT in the industry was a long term goal, but was not foreseeable for at least another 5 years. Only 3.4% said they were already embracing IoT.

But while the vast majority of insurers are yet to fully test the waters with connected homes, there are providers that are adopting IoT nice and early.

Smart insurer Neos is using technology to help detect faults and security risks early, through 24/7 device monitoring, so policyholders reduce their likelihood of making a home insurance claim. Rather than insuring for the worst case scenario, Neos adopt a prevention and cure approach.

Disrupting the home insurance model

Damage caused by leaks can have wide ranging consequences, from damaging floors and carpets to leaving you out of your home for months on-end until your home is fully repaired.

‘Escape of water’ can be one of the most expensive home insurance claims. The Association of British Insurers (ABI) estimates that damage caused by loss of water and floods can cost households in excess of £20,000 along with a host of additional consequences, including discomfort and being out of your home for a prolonged period.

One way that Neos has challenged this is through the incorporation of devices packaged alongside an insurance policy. Neos’ leak detection device aims to prevent the damage happening in the first place, with a push notification system through your app that alerts you to any irregularities.

By spotting and fixing a problem in the early stages, homeowners and renters reduce the need to make a claim. In turn, this is likely to lead to reduced future premiums and preservation of your no-claims discount.

“There are two ways whereby households could make a saving on home insurance. Firstly, smart device ownership can decrease loss ratios for insurers by 25%, as devices which monitor water loss, leaks and fire diminish and mitigate the need to make a claim. Insurers can then, in theory, pass down these savings to households. Secondly, as insurers learn more about their policyholders, they’ll be able to pass on savings at the point of renewal, therefore reducing the need to switch.”

Paul Merrey, insurance partner at KPMG.

MoneySuperMarket data shows that the cost of home insurance increases significantly for those who have made more claims. While the initial costs of investing in smart devices can be expensive, the long term benefit lies in the extra security and assurance that your home is protected and you’ll be less likely to have to make a claim and fork out for a more expensive home insurance policy in future.

How making a claim impacts your home insurance premium

Number of claims versus percentage increase in premium

How home insurance could change in the future

With technology acting as a catalyst for change within the insurance industry, the way we buy insurance in the future could look very different from how it’s done today.

“As many homes become more connected, home insurance will adapt. Policies will continue to change to meet changing consumer needs and technological changes in how we live our lives. For example, policies can now cover loss of downloaded music.

Insurers are also already using technology to improve customer service. This includes text alerts warning of possible impending bad weather such as flooding, advice as well as utilising all forms of social media.”

Prevention over cure

With new and innovative smart devices entering the market all the time, and crucially, the price of these devices decreasing, it’s now becoming a lot cheaper to protect your home in a cost-effective manner. In the future we could see a reverse process whereby a consumer buys a suite of security devices and home insurance becomes a subsidiary product that comes alongside the package of security boosting products you have invested in.

“As households take steps to improve the security of their homes, they mitigate the risk of being burgled. In the future, we could a shift in prioritisation whereby home insurance comes second to the devices you choose to buy to safeguard your home”.

Matt Poll, CEO of Neos.

“What we could see is that homeowners develop an allegiance to the kit that they buy or rent, and that comes a primary focus, above the home insurance policies they choose for their homes.”

Paul Merrey, KPMG

Ring’s founder Jamie Siminoff backs up this notion by explaining how smart devices can play a role in bringing down neighbourhood crime: “Taking the lead as a more data-driven and proactive approach to protection, home insurance will become the secondary armour should a break-in happen. What’s more, with products such as Ring providing HD footage, the chances of the police finding the criminal for conviction are significantly greater.”

Pay as you go home insurance

As with telematics, or ‘black box’ car insurance, as insurers gather more information about policyholders and the factors that determine the type of cover they need, home insurance could develop so your policies are more tailored. You could get cover for what you specifically want, opposed to blanket cover for all your possessions and your bricks and mortar.

Elsewhere, home insurers could use smart device ownership to offer discounts to homeowners as a reward for taking steps to reduce the risk of getting burgled.

“Personalisation is likely to be high on the list of priorities for insurers. Insurers can use data to understand the specific needs of policyholders and can offer policies that don’t simply come off the shelves. As insurers intelligently use data, the number of questions you’re asked is likely to reduce as insurers will already know risk factors associated to you, making the buying process a lot easier and faster than it is today. ”

Harvinder Atwal, Head of Customer Analytics, MoneySuperMarket.

Machine learning and chatbots

Another way that home insurance could change is through the application of machine learning and artificial intelligence (AI). As insurers develop specialised algorithms, the claims process can be automated through a sophisticated and time-saving methodology.

Insurers can also lean on innovative partners to fully embrace machine learning and AI. London-based start-up SPIXII was founded with the vision of transforming customer service in the insurance industry. SPIXII offers banks and insurers a white-label AI ‘chatbot’. This guides consumers through buying a financial product. By automating the claims process and customer service, the customer experience is made quicker and more efficient.

"Machine learning and AI are key parts of the evolution of the web. The evolution of the web has a massive influence on how we live our lives, purchase products and access services. Therefore, AI and machine learning can bring to the industry the same changes they brought to the evolution of the internet. AI is a key component for a future where a personalised insurance agent will help you find, buy, renew and modify a highly customised insurance policy, leveraging all the power of previous generations of Web technology."

"In connected homes, should a camera see a house get burgled while you’re on holiday, it could process the payment - paper-free - with no interaction between the policyholder and claim support. This would completely transform the claiming experience"

Alberto Chierici, co-founder, Spixii.

Peer-to-peer insurance

The new kids on the block are startups that have a collective focus to what they offer.

Newcomers to the insurance space are using the peer-to-peer model, whereby risk is shared amongst policyholders. If the claims made during the year leave the scheme with any profit, the insurer and policyholders have a range of options to choose on how they share these.

The collective angle to this approach, in theory, could have the potential of reducing fraudulent claims as policyholders will think twice about making claim that could affect their opportunity for cashback or reduce the amount that goes towards a charitable cause.

For instance, Lemonade groups policyholders together based on the charitable cause they are interested in. If a profit has been made at the end of the year, Lemonade has a ‘Giveback’ scheme where profits can be donated. As the number of policyholders who join Lemonade increases, so does the amount that can potentially go to charity. Lemonade states that according to their modelling, if 100 policies are sold, then $3,000 - $10,000 could be funded to a charitable cause. If this was up-scaled to 1,000 policies, the donation projection increases by 900% to $30,000 to $100,000.

In Germany, Insuretech company Friendsurance rewards policyholders who haven’t made a claim with a bonus payment at the end of the year, which could allow policyholders to recoup up to 40% of their premium. In China, TongJuBao is a community risk-sharing platform whereby insurance policyholders can group together and pool their premiums on social risks including marriage protection insurance and child safety insurance.

The collective angle to this approach, in theory, could have the potential of reducing fraudulent claims as policyholders will think twice about making claim that could affect their opportunity for cashback or reduce the amount that goes towards a charitable cause. Of course it may also deter genuine claims – something we wouldn’t want to see and needs to be considered.

“While the Financial Conduct Authority has found that a number of leading insurers, such as Admiral, Legal & General and esure, have claim success rates in the region of 85%+, many people still feel as though insurers may not be on their side all of the time and in fact making a claim is a long and laborious process. Start-ups such as Lemonade not only aim to make claiming hassle-free, they are changing the way we think about insurance so we begin to engage with what the impact is of choosing an insurer that offers more than just policy paperwork.”

Kate Devine, Head of Home Insurance, MoneySuperMarket.

If you could choose a smart invention for your home, what would it be?

35%

Self cleaning oven

21%

Self cleaning loo

18%

A smart gardener

14%

Self-emptying bins

12%

Smart vacuum cleaner

of Brits would buy a smart device if they could see a reduction in their home insurance price

of Brits plan to own a smart device by the end of 2018

Cyber security & hacking

Could my smart home be hacked?

Cyber security is becoming ever more prevalent as we step further into a digital age – and rightly so. The amount of sensitive data stored on the World Wide Web is ever-growing, and alongside it, a new wave of crime. So with smart home technology in our sights, could this ultimately jeopardise our safety? Could our homes get hacked?

Laura Duncan, Senior Cyber Security Manager at Price WaterHouse Cooper (PwC), explains how you don’t have to be a tech expert to ensure your cyber presence is protected:

“It’s basic housekeeping - and getting the basics right is important, for both consumers and organisations. When buying a smart product, do some online research first to see it has been hacked before, make sure your password is strong and your network secure”

Most of us with a computer are more than aware that they can be hacked, spammed, and riddled with viruses if we’re not careful, and these same threats could hit a smart home’s connected devices.

You wouldn’t leave the house without locking your doors and closing the windows, and protecting your smart home entails that same level of precaution and vigilance.

Protecting your connected network

The network router acts as the first line of defence for keeping your systems safe. Make sure this is properly configured, your passwords are strong and encryption is up to date.

“Some attempts to infiltrate a home rely, quite simply, on the homeowner using their intelligence and staying alert to threats, notably those that use phishing and other forms of social engineering to acquire user data.

An example of this might be an email with a link asking the user to update your details. If malicious, this could take them to a fake website where their credentials are harvested and then used against them.”

Ben McCabe, Tech Journalist, Andrew Lucas London

Top tips for protecting your smart devices

By Laura Duncan, Senior Cyber Security Manager at PwC

Change your default password of your Wi-Fi and smart device.

Keep the device updated and don’t ignore system updates, these can make sure you’re always protected with the latest software.

Disable Universal Plug and Play (UPnP) which is also known as network discovery. Having this eliminates the hassle of figuring out how to configure devices the first time they’re connected, but it can also make it easier for hackers to get on to your network.

Be vigilant and seek out assistance from the provider if you have concerns. There will always be a risk.

Smart security for your home

A property with a home security system is five times less likely to be burgled than one without.*Home security systems have been around for years, but with recent digital advancements, there’s some new players on the field – and best of all, they don’t all cost an arm and a leg.

Both Ring and Google Nest provide affordable security solutions for keeping an eye on your home, from your phone. Both offer 24/7 live streaming, and alert you should something appear awry.

Hive door and window sensors notify you if you’ve left a window open or there’s movement in your home. So if you want to keep an eye on what time your children are arriving home while you’re out, or generally keep tabs on the comings and goings of your home, these sensors can provide just that.

Smart home providers also offer more elaborate systems to protect your home, such as automated lighting to come on while you’re away, to even installing panic-rooms.

“While a conventional burglar alarm will help to deter intruders, a smart home security system goes even further by keeping you informed with real-time notifications about threats such as break-ins, fire, flooding and even carbon monoxide levels.”

The top concerns of Brits surveyed were…

Future of smart homes

Any speculation about the future of smart homes is purely that – but we can see the direction of travel, so wanted to have some fun by imagining what the future of smart home technology is going to look like.

The Internet of Things is projected to hit 25-30 billion devices worldwide by the early 2020s. This influx of smart home devices, could ultimately store and distribute data that will be fed into a grid. So we won’t just be seeing the expansion of smart homes, but smart cities, too.

“With domestic burglary on the rise, innovative solutions need to be part of a collective mission to deter and prevent neighbourhood crime from happening. To make our homes and those of our neighbours’ safer, we must continue to evolve technology along with our increasingly connected lives. Smart home tech that gives us a sense of presence, even when we’re not at home, can allow us to do this. Traditional security methods alone just aren’t enough anymore; as criminals become more sophisticated, so must we.”

Jamie Siminoff, Ring.

“It seems likely that artificial intelligence will play a highly significant role in shaping our future homes. This is likely to be integrated into most of the devices in our properties, using predictive algorithms and deep learning networks to create a home that makes intelligent decisions based on external data and factors individual its occupants, such as body temperature, activity and even stress levels”

Krystian Zajac, Founder & Chairman of Andrew Lucas London.

“The insurance industry is gradually preparing for the smart automated home, but the issue here is one of knowledge and understanding of the way automation is integrated within the home and the hidden costs surrounding it. There’s always going to be the need for highly trained and skilled technicians, who understand the rapidly changing future development of smart home technology”

Malcolm Richards, co-founder & director, Veresure Insurance Services.

“There’s an ever-increasing awareness of what a connected home is capable of and specialist integration companies like Cyberhomes are meeting that increased demand. The requirements for high-specification homes increasingly expect the lighting, heating, AV and security to be integrated into a single, easy-to-use and energy efficient control system.”

Digital wallpaper

Serial-decorator? Your solution might soon be here. Digital wallpaper could mean switching up your home décor in a matter of seconds, all with a simple tap. Download your favourite themes, styles, and patterns and you’ll never get bored of your interior

Home health checks

Laser technology in your home will be able to scan you as you walk through a door, and identify any unwanted health irregularities. This has a long way to come, but the savvy tech behind this has certainly been born.

Home maintenance checks

Your home could become self-sufficient in checking what maintenance needs to be done. This means through sensors and laser technology, powered by AI, your home can auto-detect when your pool needs a clean or the gutters need de-clogging.

Solar roof tiles

Solar panels to power your home are already alive and kicking – but the future could see solar power becoming the norm, by having it integrated into building materials. Roof tops will be designed for optimum energy consumption, meaning a cleaner, greener home.

Smart refrigerator

Samsung and LG have both developed smart fridges, with built in touchpads to review your food stocks, browse the internet, and find recipes. But the next era of the future of food storage lies in self-cleaning, eco-friendly fridges which are built into your kitchen wall, can automatically order food, and even grow your own herbs inside.

The door bell

If connected to a smart watch or wristband, then you could know who was outside before they even rang the doorbell. And if connected to a door lock, then the person on your ‘safe’ list could be allowed to enter without you even going to the door.

Smart lighting and curtains/blinds

You can currently control your lighting from either your phone or an integrated system, but in the future, lights will be autonomous. Your home will know when you are in the room, changing the lighting throughout the evening – they could even come on if an intruder came near the house a la Home Alone.

Augmented reality

Every surface has the potential to become interactive. Everyday activities could have an added digital overlay, which according to Apple CEO Tim Cook, will become as normal as using a smartphone – once it becomes technologically viable.